Structured warrants are financial instruments issued by a third-party financial institution, usually banks. Structured warrant holders have the right but not the obligation to buy (for call warrants) or sell (for put warrants) an underlying asset at a predetermined price either on the expiry date (European-style warrants) or on or before the expiry date (American-style warrants). Underlying assets may be a particular security or a basket of securities or an index.
Structured warrants offer investors the option to either long or short the underlying asset. If investors expect the index or stock price to go up, they should choose the call warrant. When the underlying asset increases in price, so does the call warrant. If investors expect the index or stock price to fall, they should choose the put warrant. When the underlying asset decreases in price, the put warrant price increases.
The structured warrants listed on SGX can be identified by their trading names which also reveal some important information of the structured warrants.
For a structured warrant issued on a stock, the trading name convention used by SGX is as follows:
Name of Underlying Asset: DBS Bank
Issuer: Macquarie Bank
Exercise style: e = European-style; a = American style
Type: CW = Call Warrant; PW = Put Warrant
Expiry Date: YYMMDD
Serial Number (Optional): When an issuer lists more than one structured warrant with the same underlying and expiry date, the structured warrants are distinguished by letters A, B, C,D, etc. after the expiry date.
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